Energy affordability, not availability, ought to be the priority of Atlantic Canada's premiers
Premiers must tackle plight of those facing energy poverty, writes Larry Hughes
The final communiqué of the Council of the Atlantic Premiers Conference held in Pictou, N.S., on Friday highlighted the need to improve energy security in the region. The premiers called on the federal government to support the long-term development of the Atlantic Loop, and help develop wind, solar, and tidal power projects and small modular nuclear reactors.
However, there is an energy security issue with which many Atlantic Canadians are already dealing and it is not the long-term availability of energy, it is its short-term affordability.
In the residential sector, three factors influence energy affordability:
First, the household's energy demand, notably the energy used for space and water heating, appliances, lighting and space cooling.
Second, the price of the energy sources used by the household to meet its energy demand.
And third, the household's income.
The risk to a household's energy affordability can be found by comparing the total cost of the energy used by the household with its energy budget. If the cost is the less than what is expected, the household is energy-secure. If the cost exceeds the budget, the household is energy-insecure, or, more commonly, is in a state of energy poverty. (Energy poverty refers only to household energy costs; transportation energy costs are omitted.)
Breaking down energy poverty
Most energy poverty research limits a household's energy budget to no more than 10 per cent of its total expenditures.
Applying the 10 per cent limit to the most recent household energy data from Natural Resources Canada and household spending data from Statistics Canada, shows that the number of households potentially in energy poverty varies greatly across Atlantic Canada, both among and within provinces.
The most widely used energy sources for heating in Atlantic Canada are electricity, fuel oil, and wood (unlike in the rest of Canada, natural gas does not play a significant role in the region).
This varies by province, with at least 50 per cent of the households in Newfoundland and Labrador and New Brunswick relying on electricity for heating, compared with at least 50 per cent of the households in Nova Scotia and Prince Edward Island relying on fuel oil.
The lowest-cost energy source is wood and is almost always used in conjunction with electricity or fuel oil. About one-fifth to one-quarter of the single-attached homes across the region use wood for heating.
Regardless of the province, the data shows that the space and water heating costs for houses built more than 40 years ago and using oil for heating can be three or four times greater than for houses using electric heating and built in the past 20 years.
In all provinces, apartments typically required the lowest energy budget, followed by single-attached homes, and finally single-detached homes. Single-detached homes are the predominant form of residence in all four provinces and usually require the highest energy budget.
Regardless of the energy sources used or the type of building, energy poverty limits a household's short-term choices to either using more of the household income to cover the cost of the energy consumed or reducing energy consumption, or both.
For many households, the 10 per cent energy poverty threshold is soon breached when wages are not keeping pace with the increasing cost of food, goods, and transportation.
Households earning less than about $60,000 a year and heating with oil could be in energy poverty this winter unless there is a considerable decline in the price of crude oil and inflation is brought under control over the next several months.
Households in poorly insulated, older homes with baseboard electric heating will be in a similar situation.
Most provinces have a heating or energy rebate program to reduce the impact of high energy costs during the winter months. These budgets will need to be expanded as the cost of energy and the number of households falling into energy poverty increases.
There is a window of opportunity
Fortunately, there is a brief window of opportunity this summer to help those households with the most pressing energy needs.
Each province, or provincial agency responsible for reducing household heating costs, will need to redouble their efforts to reduce the energy demand in these households.
This might mean expanding existing energy-efficiency programs and, where necessary, upgrading or replacing existing heating systems.
If a household is forced to choose between heating and eating, it will be facing a heating emergency. Provinces, municipalities and community groups will need to prepare for such heating emergencies by having heating shelters available for vulnerable households.
In some cases, households may turn to other methods of keeping warm even if actions such as those described above are taken. Some choices, such as the unsafe operation of electric heaters or using a poorly maintained chimney, can result in house fires with potentially fatal results.
The Atlantic premiers are rightly concerned about long-term energy security in Atlantic Canada.
However, they must not forget the pressing need for the short-term energy security of all Atlantic Canadians.